SmallBizResource Blog -- Economy

SBA Gives Thumbs Up To The American Recovery and Reinvestment Act

Posted by Gayle Kesten Wednesday, Feb 18, 2009, 04:16 PM ET

One month after becoming President of the United States, Barack Obama has made good on his economic stimulus plan, signing into law the $787 billion American Recovery and Reinvestment Act. And from the standpoint of the Small Business Association, we have everything to gain.

"The tax incentives and credit stimulus elements of the Recovery Act will truly help small business owners affected by the credit crunch, and will provide financing opportunities to help them create new jobs in their communities," said Acting SBA Administrator Darryl K. Hairston, in a statement released earlier today.

All told, the SBA will receive $730 million, which includes:

• $375 million for temporary fee reductions or eliminations on SBA loans and increased SBA guaranteed shares, up to 90 percent for certain loans
  
• $255 million for a new loan program to help small businesses meet existing debt payments
  
• $30 million for expanding SBA’s Microloan program, enough to finance up to $50 million in new lending and $24 million in technical assistance grants to microlenders
  
• $20 million for technology systems to streamline SBA’s lending and oversight processes
  
• $15 million for expanding SBA’s Surety Bond Guarantee program
  
• $25 million for staffing up to meet demands for new programs
  
• $10 million for the Office of Inspector General

"The small-business provisions in the stimulus package are certainly steps in the right direction, but there is still much work left to be done," Sen. Mary Landrieu (D-La.), incoming chairwoman of the Senate Committee on Small Business and Entrepreneurship, told Entrepreneur.com. That work, she said, includes confirming Karen Mills as SBA administrator and making that a cabinet-level position -- both of which echo what The MicroEnterprise Journal's Dawn Rivers Baker said in my post from earlier today.

At least one bone of contention, voiced by the American Small Business League: The law contains no specific provisions to direct even $1 of the $499 billion allotted to new government spending to small businesses. "Since the purpose of the stimulus bill is job creation, small business owners and advocates are puzzled as to why the bill virtually ignores the very firms that create 97 percent of all new jobs. In addition to being shut out of the new economic stimulus bill, federal investigations have uncovered that small businesses are not receiving the minimum 23 percent of federal contracts as required by existing federal law."

We're nowhere near putting a bow and curling ribbon on the recovery package, so I'm not even going to try. In the meantime, I like what Peter Morgan, executive vice president of small-business lending at Zions First National Bank in Salt Lake City, told the L.A. Times on Monday. The bill, he said, "isn't going to miraculously change everything overnight. But I think it provides a much better avenue or foundation for helping small businesses pull out of the slump."

From his mouth...

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